Ray Dalio: First Investment In The Stock Market

2019-04-23

“Just generally as an entrepreneur, you have to think differently in order to be successful. There’s a high risk of being wrong – you have to be audacious, you have to think differently, you have to be confident.” Ray Dalio, founder and chairman of Bridgewater Associates, visited campus tonight for View From The Top. Dalio made his first investment – $300 in Northeast Airlines – when he was just 12 years old. It tripled shortly thereafter when the company merged with another. He went on to start Bridgewater Associates at age 26, growing it to be one of the most successful hedge funds in the world.⁣ ⁣⁣

At the event, Dalio also spoke on how conflicts with other nations – political or otherwise – will be unavoidable in the future, but their outcomes will depend on how leaders handle those conflicts. Dalio ended by touching on the increasing wage gap in the U.S. “If we don’t treat it as the most critical issue of our time, I think we’re going to be in trouble. There needs to be redistribution of opportunity, not just of money.”

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Ray Dalio: First Investment In The Stock Market

Transcript

Let’s start back in the early days on Long Island. Now you are quite the capitalists. Growing up you were a paper boy a lawnmower snow shoveler and a golf caddy. And at the ripe old age of 12 you made your first investment in the stock market. Talk to us about how that even happens.

There was no big deal really at the time in the 60s the stock market was the hottest it has ever been. Literally if you got a haircut or anything we would talk to you about the stock market and so when I was caddying they were talking to me about the stock market and I take my six dollars a bag and take my 12 dollars.

And when I got 50 dollars on I put it in the stock market. It was just a natural thing to do and it did pretty well.

The first investment Yeah it was the only company that I ever heard of that was selling for less than five dollars a share. So I figured I could buy more shares which meant if it went up I’d make more money. That was my rationale. That was a stupid rationale. Right. And it was a company that was about to go broke bought another company acquired it tripled in value and I thought this game’s easy I can make a lot of money games that easy.

But that’s what got me hooked.

So you got a bit of a rolling start but you continue to invest through high school and university and you later enrolled at a business school. One we like to call the Stanford of the east where you met of course still Peterson and Joel was in my head group and we have good memories now. We’ll talk with those later. Now for your summer internship many of your classmates were going to Wall Street and they were seeking these glamorous equity trading positions. You on the other hand sought out a role in commodities trading which at the time wasn’t just less prestigious. It was pretty obscure for an MBA to get that kind of role. So talk to us about what that experience of going against the grain taught you.

Well it was.

I figured Bart had had low margin requirements. Right. You only had to basically put up about 10 percent of the money. So I figured if you’re going to be right you’ll make more money because the low margin requirements so I got hooked on commodity trading. And then there wasn’t anybody who would go from Harvard Business School. So this was nineteen seventy two the summer of 1972 when I went to the Director of Commodities and I begged for a job. And he gave me a job and that was just before the 1973 oil crisis and the oil shock and then Wall Street went to hell and commodities became hot and I was lucky. And so I went into commodities. So you are hot property by second year and I never I never really knew anything about commodities other than the summer job but I was then on hot property because there was no Harvard Business School type person in commodities. So I got a job which was stupid to hire me.

But they did.

And then that company then got into trouble then I went to another company and I did that for about a year and then started Bridgwater.

So I just wanted you skipped over something there and many of us here in the room re we know you as a master a master of thoughtful disagreement. OK. But you didn’t have that concept fully nailed back in those early days. So talk to us about that disagreement you had with your boss on New Year’s Eve. Well I mean we got drunk and then we you know. I. Slugged him and.

And and it was a good guy. And what he did he.

But he drove home. He totaled Iscar. His wife chewed him out because they missed their party. And he came in with a black guy and he didn’t fire me that he didn’t fire he did not fire me. OK. And then it was another incident that caused him to department.

Store. I want to know what got you fired.

Can you tell us what it anyway and where we that that was the best thing that actually happened to me because then I was on my own.

Now some of our career advisers around here we might frame that one as passion. Right.

And that it was it’s it’s you know kind of in retrospect it was a stupid thing to do. Right.